Suppose we find a market where firms produce something called "good x". Let's assume that there are many buyers and sellers in this market and assume further that the good x sold by one firm is exactly the same as what's sold by every other firm in this market. We'll also assume that there are no barriers to entry or exit in this market.
Below, are the cost curves for a typical firm in this market (let's assume that every other firm also has these cost curves too).
|TC = 240||if q = 0|
|TC = 4q2 + 10q + 400||if q > 0|
|MC = 8q + 10||if q > 0|
1) How many units of output should the firm produce if the market price is given as $170?
2) What are the most possible profits that this firm can earn when the price is $170?